The Case For Overdraft Protection

This is a big profit-center for lenders. They get to charge big fees when you go over your credit limit or over your bank balance. This has happened to me several times. I was glad for the overdraft protection. It's advantages to me outweighed its fees.

The Los Angeles Times reports:

Reporting from Washington – Banks and credit union officials described their controversial automatic overdraft protection programs — with fees that average $35 each time they are triggered — as a courtesy so customers aren't embarrassed when a store cashier denies a purchase or, worse, when a mortgage check bounces.

"Payment rejection means embarrassment, inconvenience, merchant fees and other adverse circumstances," said Nessa Feddis, senior counsel at the American Bankers Assn.'s Center for Regulatory Compliance.

But lawmakers weren't buying it Friday as support builds in Congress to restrict overdraft programs in the wake of complaints that fees are too large and the protection is forced on unsuspecting customers.